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bigduckontax, Accountant
Category: Tax
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Hi. I am considering letting out of my property (only main

Customer Question

Hi. I am considering letting out of my property (only main home) and move to my boyfriend's. The property is joint-owned by my sister and I, however my sister has immigrate abroad a few years ago so I’ve been paying all the bills and solely charge of this property.

I'd like to find out if my sister's liable to any UK tax?
- if I let out the property for a period of time then sale in the future, providing that I will receive all the rental income.
- Will both my sister and I need to pay for capital gains tax when selling our property in the future? or can it be just me?
- Is it worth to change the property deed to my name only?

Thanks
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

Firstly, if you are to receive 100% of the rental income no tax liability falls on your sister. I would advise that you have this agreed in writing to preclude any future disputes.

Secondly you will be liable to CGT, but your sister may not be. As far as your sister is concerned CGT is incredibly complex. The last budget introduced a measure which will make her liable, but only that element of the gain from April 2015 values.

Thirdly changing the deeds just to you would trigger a capital gain at current market value on your sister's share.
Customer: replied 3 years ago.

Thanks Keith.


 


Could you expand the second point a bit more, where the last budget introduced but only from april 2015? in the simplest term if possible please.


 

Expert:  bigduckontax replied 3 years ago.
This was a measure to stop tax avoidance by non residents who could buy and sell property without being subject to CGT. They will be from the 15/16 tax year.
Customer: replied 3 years ago.

I see. So even we bought the property ten years ago and sell after 2015, this means non-residents would need to pay for CGT, right?


But as long as I pay for the CGT of the whole property, does my sister still need to do the tax return? She's doesn't deal with this property anymore except her name on the deed.


 


And if we change the deed before April 2015 to my name only, would it still trigger her share of CGT? She still holds a british passport and was a UK taxpayer until she moved abroad permanently.


 


Also, is it correct that there won't be CGT if I decide to let out one room to a lodger, when sell in the future?


 


many thanks

Expert:  bigduckontax replied 3 years ago.
Your sister is no longer resident in the UK. Providing she completed a P58 on departure she is not liable to UK taxation. If she has not done this she should do this as soon as possible. However, the Budget changes post April 2015 may catch her.

You will only pay the CGT relevant to your 50% of the property.

Her nationality in this matter is irrelevant.

Renting out a room under the Rent a Room Scheme does not attract capital or income taxes provided the rental is below GBP 4250 per annum.
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Thanks Keith for helpful advice!

Expert:  bigduckontax replied 3 years ago.
Thank you for your thanks and your support.

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